Until 2010, the Private Postsecondary Education Act let students sue schools. It required that private colleges meet a minimum graduation rate of 60 percent and that certain vocational colleges place at least 70 percent of graduates in jobs in their fields. And after recruiting students, colleges had to wait three days to enroll them or sign them up for loans so applicants could have a "cooling off" period from high-pressure sales tactics.

California lawmakers removed or watered down these and other protections in 2009 amid lobbying from the for-profit education industry, which donated at least $197,700 in 2009 and 2010 to the campaigns of Assembly members and state senators who were in office when the law passed, according to an analysis by MapLight, a nonpartisan group that tracks money in politics.

Related Stories

Several large donors have also been accused of deceptive or unethical tactics and had to pay huge settlements.

The biggest political contributor was Education Management Corporation, which in June agreed to pay $4.4 million to San Francisco to settle allegations that its California Art Institute campuses had used deceptive marketing tactics.

Other major donors were the Apollo Group, which owns the University of Phoenix and in 2009 agreed to pay $67.5 million to settle a lawsuit alleging it had improperly obtained federal student aid; DeVry University, which spent less than $3,000 a year per student on education but paid its chief executive $6.3 million a year, according to a U.S. Senate investigation; and Bridgepoint Education, which in May agreed to pay $7 million to settle allegations of deceptive enrollment practices at its online schools.

The new version of the law extends the Private Postsecondary Education Act through 2016.

A state audit found in March that the bureau never identified unlicensed institutions as required; conducted only two unannounced inspections - far fewer than its 456 announced inspections, though both methods were to be used equally; and lagged so badly in processing new schools that its backlog topped 1,100 applications. The bureau also "failed to appropriately respond to complaints," with hundreds languishing for six months or more.

"It's clear the bureau has not done a good job," said state Sen. Ted Lieu, D-Torrance (Los Angeles County), chairman of the legislative committee reviewing the law. "It has enormous power, but it's not exercising that."

The law expires in December. Instead of restoring protections, Lieu said the revised version he is co-authoring, SB-1247, would reinvent the bureau as a board in hopes of forcing it to better regulate the industry. As a board, it would be open to greater public scrutiny by falling under California's open-meeting and public-records laws.

"We're going to hold public officials publicly accountable for whatever failings may exist," said Ed Howard, senior counsel at the Center for Public Interest Law and the Children's Advocacy Institute. The groups support the legislation and are also proposing stronger regulations for schools that enroll veterans and receive veterans' financial aid.

As for student protections, Johnson noted that under current law, schools must tell potential students about their completion rates, job placement rates, ability to transfer course credits and other information. Students also have seven days to back out after they enroll.

But that information is usually buried in the fine print of a course catalog, said Smith, the Legal Aid attorney. Instead, she said it should be clearly shown to applicants in separate disclosures.

And students should once again be given three days to weigh their options, she said.

Smith submitted these recommendations to Lieu, and urged lawmakers to reinstate students' right to sue schools. Lawmakers removed that right in 2009, because they hoped the state's new Bureau for Private Postsecondary Education, rather than lawyers, would help students resolve problems.

"This should not be about attorneys getting rich," Johnson said.

Lieu said that if the proposal to turn the bureau into a board fails, he would recommend that the bureau staff add more people. And then, if the bureau's performance still doesn't improve by 2016, he said the state should restore students' right to sue.